January 14, 2013

Apple, Google, Several Other Tech Giants Work Together To Buy Kodak Patents

It´s always nice to see companies that are normally at each others' throats come together to help out a struggling company in need. Of course, it´s a little different when these companies are buying out a portfolio of patents so the pressured company can stay out of bankruptcy court.

The same group was able to come together last year as well, winning patents which involve the capture, manipulation and sharing of digital images.

Judge Allan L Gropper of the US Bankruptcy court in Manhattan approved the $527 million deal on Friday, noting final approval is pending a few international nods.

Judge Gropper has said this multi-million dollar deal is “disappointing” as it´s far below the $2 billion the patents were originally said to be worth.

“But we´re moving the case forward, so we should be optimistic,” said Judge Gropper, according to Bloomberg.

Disappointing as it may be, this $527 million deal is an important one for Kodak, who has been working to pay back their debtors as a part of their bankruptcy process.

"The monetization of non-core IP assets achieves one of Kodak's key restructuring objectives while positioning its commercial imaging business for further growth and success," the company said in a statement to Reuters.

The hefty sum they received from this section of patents will also allow the company to settle patent litigation which could have ended up costing them much more.

One Kodak lawyer put a positive spin on the deal, telling the Wall Street Journal: "The amount in the transactions, which are complicated and integrated, are the highest and best value available to the debtors.”

In addition to steering Kodak away from future patent litigation, this sale also meets the requirements of a loan offered to them by bondholders.

According to a second Kodak lawyer, these bondholders were willing to make a $830 million loan to the company, but only if they could make at least $500 million from these digital imaging patents. All told, Kodak is expected to take home $525 million once the sale is complete.

This band of rivaling companies will likely use the Kodak patents to improve the cameras in their smartphones and tablets.

Kodak first filed for bankruptcy a year ago and has since shuttered the doors on many aspects of their business. They´ve since ended their printing business and have made attempts to sell their film, photo kiosk and scanner units. The company has even signed a licensing deal with JK Imaging Ltd. to sell cameras with the Kodak name. Through all these actions and more, Kodak hopes to end up with enough cash to pay off debtors and mitigate any future losses.

According to the Wall Street Journal, though Kodak initially estimated these patents to be worth up to $2.6 billion, the first bids came in below $250 million. These companies then combined into consortiums and were able to make larger bids.